Stock Market. OK, who is jerking it around?

[JBoy]

Seems like every second day, the markets have either a significant drop or a significant gain. Today it's up. These swings are always on the basis of some "new" news about earnings results, economic data or forecasts. The news is always accompanied by manic collective pessimism or optimism that tilts things like a drunk guy on a skateboard.

What the hell? The world can't be ending one day, then fine the next, then ending the day after.

Maybe if these forecasters and reporters only worked one day a week, there would be some stability in the markets.

[Ozymanithrax]

1. The stock market is responding to a world wide sense of insecurity...

which leads to volatility.

[TomCADem]

6. When Has The Stock Market Not Been Volatile This Decade?

For that matter, if you go back to the 1970s, there has always been wild swings in the market. The advent of computerized trading has made things even worse.

[Ozymanithrax]

9. In general, the trend under Bush was up after the 9/11 willies and 2007-2008.

Hell, the stock market is a chaotic system, but it can trend one way or another, especially when it is manipulated by purposefully created market bubbles. Now, in an absence of bubbles and an abundance of insecurity, the trend is not up.

What we should take from this, is that the stock market is not a guaranteed 10% increase per year, one of those bills of goods sold by the right. It answers to the populations general sense of well being. If they feel good, it trends up. If they feel insecure, it bounces. If they feel bad, it drops.

It would be interesting it we could create a graph of popular sentiment based on posts at DU and see how that compares with the market.

[LiberalLoner]

2. Doesn't a lot of it have to do with the computers doing trades? Robot traders or whatever? n/t

[groovedaddy]

3. A short sellers scenario if there ever was one. Computerized trading, like computerized voting,

leaves the door open to fraud and manipulation.

[izquierdista]

4. As a famous financier once said...

"The markets will fluctuate."

[onehandle]

5. Very little of the stock market is based on anything real.

It's bullshit based on whims.

[livetohike]

7. Stocks go up and stocks go down.

Following the market on a daily basis (some follow it by the minute) will make one crazy. I blame the cable channels for making Americans neurotic with their second by second stock market numbers displayed on their screens. Then there is Bloomberg TV, CNBC etc. scaring the daylights out of everyone and taking advantage of the fact that the majority of people have no idea what the so called pundits are talking about.

[Junkdrawer]

8. Why, it's almost like powerful players, flush with zero-interest Fed money,

are manipulating the market to fleece the small investor.

Almost.

[SheilaT]

10. The stock market is far too huge for it

to be controlled by anyone, or any group. Back in the 1920's that was done as there were far, far fewer stocks, and only a tiny volume of trades compared to what happens these days.

But the poster who mentioned automatic trading is correct. There are all kinds of automated programs out there, many of which I believe are connected to large funds, which have automatic buy or sell signals based on whatever their programming is. Back in 1987, during that huge drop (508 points, 23%)on October 19th, the volume surpassed 50 million shares for the very first time. These days I believe upwards of a billion shares are traded each day on the NYSE.

The problem with the programmed trading is that all of the programs are essentially alike, so a small sell-off triggers a larger sell-off which triggers and evern larger sell-off. A buy signal in one program is a buy signal in them all.

Prior to the 1929 Crash, the typical volume of stocks traded on the NYSE was around a million shares a day, maybe less. On October 29, 1929, 16 million shares were traded. It was 1968 before that large a volume of shares was traded on Wall Street. One book I read about the 1929 Crash said that a very large number of the trades that date were never completed, because it simply wasn't physically possible to do so, given the paper system in effect then.

Computers have made a huge difference.